Financial services blockchain value to hit $462bn over next decade

By Roger Baird on Monday 11 February 2019

Savings and Investment

Cost savings are driving the adoption of blockchain in the finance industry.

The value of the financial services arm of the blockchain market is forecast to rocket to $462bn over the next decade.

The projected use of this technology, which is little more than a decade old, is set hit this figure by 2030, according to a report by economics research group IHS Markit.

Financial service markets have adopted and tested blockchains, distributed ledgers where transactions are updated in real-time among all parties, because of the huge potential for cost savings.

The industry has so far used them in a variety of ways such as cross-border payments, share trading and syndicated lending.

“Because the financial sector includes markets of significant value, even a small percentage of cost savings and efficiency gains can lead to significant business value for companies and industries that introduce blockchain technology,” said the survey, called Blockchain in Finance Report 2019.

It added: “The derivatives market, for example, is worth around $544trn a year and the market capitalisation of all the world’s stock markets is equal to $73trn.”

The report said regulatory bodies such as America’s Securities and Exchange Commission, the UK’s Financial Conduct Authority and the Hong Kong Monetary Authority “reacting positively” to the technology is helping it to become “more mainstream”.

IHS Markit principal analyst Don Tait said: “By applying blockchain to the clearing and settlement of cash securities – specifically, equities – investment companies could save up to $12bn in fees.

“Blockchains can also save financial organisations money, by cutting out many of the traditional middlemen involved in the financial sector.”   

The report said the value of blockchain in the financial sector was $1.9bn in 2017.

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